While some analysts say the fall in oil prices has tempered Guyana’s expectation to earn US$300 million in oil revenues in 2020, others are still optimistic of a good outturn for the nation.
So optimistic are politicians on both sides of the fence, that they are doing everything to secure power.
Early elections were planned after the government of David Granger lost a vote of no confidence by a margin of 33–32 on 21 December 2019, the government having held a one-seat majority since the 2015 elections
The national vote, cast on 2 March, would decide who is in power when huge new oil reserves are explored. However, it remains disputed.
David Granger, of the People’s National Congress – Reform (PNCR) coalition, is facing Irfaan Ali of the opposition People’s Progressive Party (PPP). Both sides have said they have won.
The opposition successfully appealed to the US over what it has described as fraudulent election results, with the consequence that the Guyanese envoy has been called on the mat by US authorities.
This week, as demerarawaves reports, “The United States Assistant Secretary of State for Western Hemispheric Affairs, Michael Kozak, on Thursday, summoned Guyana’s Ambassador, Riyad Insanally to inform Guyana that a government sworn in based on non-credible results would be illegitimate.”
The news cite quoted Kozak on Twitter: “On behalf of the US government, today I summoned Guyana Ambassador to the US Riyad Insanally to convey our firm position that any government sworn in based on flawed election results would not be legitimate. Every vote must be counted.”
The fuel underneath all of this political desperation is the country’s oil prospects, even though the commodity’s prices are now on the decline.
Brent crude oil prices reduced from US$60 at the start of the year to an average of US $25 per barrel.
Oil prices fell this month to the lowest since the 1960s, pushed by falling global demand and a price war between the top exporters – Saudi Arabia and Russia.
Analysts at Argus media.com say that the oil price collapse, which followed the early March breakdown of the Organization of Petroleum Exporting Countries talks and the expanding coronavirus outbreak, has cut revenue projections for Guyana.
However, analysts at newsroom.gy.com quote Chief Economist of the American Petroleum Institute, Dr Dean Foreman, as saying Guyana’s projected growth is long term and still remains bright.
Foreman referred to the International Monetary Fund’s (IMF) projection in October 2019 that Guyana’s real GDP would nearly double in 2020 — and more than triple by 2024 — relative to 2019.
“Expressed in constant US dollars, this translates into the economy expected to grow from $4.1 billion in 2019 to $15.5 billion in 2024,” the news source outlined.
Argus media noted that uncertain market conditions have prompted the country’s energy department to issue a second deadline extension for bids to market the government’s share of Liza crude from the ExxonMobil-operations.
ExxonMobil has also suspended construction of its new Guyana office outside the country’s capital Georgetown.
Meanwhile, the prospect of wealth is causing bitter political rifts. Recent elections remain disputed.
President Granger has agreed to a vote recount for the elections in which he was declared winner by the Electoral Commission.
The opposition has made clear its desire to renegotiate production-sharing terms in contracts signed after the ExxonMobil deal.
Foreman, speaking with newsroom.gy, said the prospects remain bright as “new investment, employment, tax revenues and the follow-on economic activities derived from having an oil industry in the country should be new and therefore ‘incremental to the economy’.”
Boasting at least eight billion barrels of proven crude reserves in the Stabroek Block Offshore, Guyana joined the list of oil-producing nations in December 2019.
Newsroom.gy said Guyana has received $11.4 billion (US $55M) for the first lift of the country’s one million barrels of oil, which was sold to Shell Western Supply and Trading Limited in February.
The sum was deposited in the Natural Resources Fund set up to manage the country’s oil wealth.
“Guyana is entitled to approximately five million barrels of oil in 2020 alone, plus the two per cent royalty and withholding taxes,” it was noted.